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Monday, July 04, 2005


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Elliot wave aside, there seems to be a strong correlation between the supposed 2000"top" and today with the period of 1927 to 1929. Both these periods experienced massive expantion of credit fueling higher prices in both financial and real assets, with the latter reaching back to levels not seen since the prior respective peeks in the rate of inflation (1921 and 1982). Yet, unlike the periods leading up to those inflationary peeks, long and short-term rates don't rise to their previous levels achieved before. Thus creating a "conundrum".

Also, the level of total debt as a ratio to GDP has skyrocketed to levels that common sense would suggest cannot be sustained. Once the expansion of credit had peaked, and will peak, a credit contraction ensued and will ensue. This is the Kondratieff winter everyone expects. One arguement I have with this great posting is that the Senior currency (British Pound durring 1700-1930's and the US Dollar since) gets stronger during the contraction of credit phase. This is caused by the supply of money decreasing relative to the supply of goods for sale and the reduction in the velocity of money. In any case cash will become KING again when sanity replaces today's insanity of intrest only loans, no down payment loans, sub-prime lending as a percentage of total lending,....etc. Just remember, the banks are lending your money, not theirs. And if you think FDIC will save you, research how long and how much depositors at recently bankrupt banks were reinbursed for their deposits (this during good times?). I'll get off my soap box now, thank you.


This is an excellent piece Yelnick.

As regards the stock market, it does not seem to have the volatility associated with great bear markets of the past, at least not yet. If one calls 2000 to early 2003 the first part of the secular bear, then the action since the supposed top in March 2005 is very lazy. In fact, since Winter 2004, we have a series of overlapping waves in a rising wedge going nowhere fast. No several percentage point sell-offs per day or anything of the sort. Nothing dramatic at all. One is hard pressed to find the Nasdaq futures move a half percent overnight when in summer 2000 it was typical for them to swing 4% per evening session. So what gives? Will we have to wait to see the DOW down 1000 points in one day and showing no signs of life before we have returned to the second bear phase of the 2000-2014 bear?

Does anyone else share this concern that we can't have returned to a great bear with all this lazy trading range garbage for the past 18 months?

No bear yet

Kondratieff Winter is over.

Iraq War was the TROUGH WAR that locked the final Kondratieff Cycle low in stone.

You'll see.

Only the Kitchin Cycle is rolling over here and bearish into 2006.

Short 2006 lows at your own peril. Kondratieff, Kicthin and Juglar cycles begin FULL UP PHASE.

No bear yet

Kondratieff Wave is timed by wars.

Top Wars
- War of 1812 – Ended Kondratieff summer
- Civil War – Ended Kondratieff summer
- World War 1 – Ended Kondratieff summer
- Vietnam War – Ended Kondratieff summer

Trough Wars
- Mexican American War – Ended Kondratieff winter
- Indian Wars/Spanish American War – Ended Kondratieff winter
- World War 2 – Ended Kondratieff winter
- 2003 Iraq War – Ended Kondratieff winter

No bear yet

Neely is calling for a 900-1000 point Dow Jones c-wave rally starting in about week and a half.

Does Prechters latest STU see the 1000 point rally coming?

If Prechter misses this next monster August rally, I recommend canceling your STU subscriptions and switching to NEoWave.


I would be very surprised if this thing crashed in a third of a third anytime soon. Just look at the Nasdaq and how impulsive it has been since April. All the up moves are violent and the downmoves take forever. Maybe Prechter's follower's covering their shorts in despair?


I can hear Prechter now. He is probably screaming another Wolf that we just completed an A-B-C and this is 2 of 2 of 2 of 2 of 2 of 2.

No bear yet

EN I agree with your scenario.

I extended a NEoWave chart so everyone can get a feel to where we are.

Chart here...

Jim Arthur

Just buy what that Jim Cramer says on Mad Money because he makes better picks than that EWI guys. You just follow Jim all the way to the bank. And its free!! no big monthly fee for that advice.

bulls kick prechter's butt

Prechter has led his sheeplike followers to the slaughter again. Like the lemmings they are, watch them drown in wave after wave of massive upside moves that will take out 11,000, 12,000 and MARK MY WORDS 100,000 before 2015. This is a tidal wave... on the UPSIDE. I further predict that Prechter will hang it up before the end of the year. It would just be too absurd to continue.


Don't think so...remember, even Neely thinks a correction later in the year will come (just not Armageddon). That should provide enough ammo to keep Armageddon fears alive.

On a separate note, this site seems to have become a Prechter hate-joke-fest. Wouldn't it be ironic if he were right after all, however unlikely it seems? :-) That would be Mr. Market's "unkindest cut of all".

No bear yet

Prechter will never be right as long as he labels 2000 as Supercycle wave V and the K-Wave bottom at 2011.

If he labels 2000 as wave IV and K-Wave lows at 2003 he still has a chance to catch the next 5th wave extensions up to Dow 50,000 and eventually Dow 100,000.

[Dow 50,000 should occur in Kondratieff Summer (2020-30's) Dow 100,000 should occur in Kondratieff Fall (2040's)]

No bear yet

No bear yet wrote: "If he labels 2000 as wave IV"

Typo....label 2000 as *beginning* of wave IV


From the Dec 2004 EWT issue: He labels 2000 as the top of Supercycle Wave III (circle).He expects IV (circle) to last a century, in a A-B-C-D-E zigzag, with A taking the Dow below 400!

Oh well, I am off to vacation. Such dreary thoughts!


Also, on the attached graph, he does show B hitting a marginal new peak about the all-time Dow high.

bulls rule

I don't hate Prechter but I love Neely. He is so supersmart and his predictions have generally been dead on. If you want a horse to bet on, he's the one. He's right maybe 9 times out of ten and his methodology is highly scientific. Science is the only way to make sense of this madness and Neely seems to have a PhD with honors in prediction.

No bear yet

Neely count is still working fine here.

Next week is final exam for Neely vs. Prechter.

Who will win? Neely "blastoff up" or Prechter "meltdown 3 of 3 crash".

Neely will.


Yes. Neely will. Neely's count is working quite nicely, thank you. Very nicely indeed. As for Prechter's count, it seems, shall we say, a bit off? As in way off? As in catastrophically, horribly, pathetically, predictably off? 2 of 2 of 2 of 2... Please. I've heard it all before. Maybe you'll be right... in 100 years!


Yes. Neely will. Neely's count is working quite nicely, thank you. Very nicely indeed. As for Prechter's count, it seems, shall we say, a bit off? As in way off? As in catastrophically, horribly, pathetically, predictably off? 2 of 2 of 2 of 2... Please. I've heard it all before. Maybe you'll be right... in 100 years!


Does anybody know what Neely is calling for after this upswing C wave to 1265? Is it an X wave down into 2006/7? If so, how deep a correction? (I know he said that he does not think the October 2002 lows will be broken again).

No bear yet (but its getting closer)

After this run to 1260 completes we are going to see a very complex correction down to SPX 1050/Dow 9300 area.

Not sure how it will unfold yet.

1. Either as a friendly bear market 1700 point Dow decline


2. A bucking bronco wave 2 of C run up to SPX 1300 into an October crash.

We're setting up here for a nice drop either way.


I doubt there will be much of a bear this year. If there's an October "crash" it will only be about 5-7%. Neely called this one perfectly. His calls are easy to follow and his annotations are excellent. I appreciate his service and recommend it strongly. It's a bargain. Prechter, on the other hand, is a sure way to the poor house. His site is so middlebrow and cheesy, like a bad telemarketing caller. It's repetitive, predictable, and appeals to an angry, not-too-bright audience.

No bear yet

EN wrote: "Is it an X wave down into 2006/7? If so, how deep a correction?"

Neely labels it as an X yep.

March highs were wave (G) and we now are in (b) of an (a)-(b)-(c) down into X which could only be as low as 1150 area according to the NEoWave diametric.

I use traditonal Elliott and I see about 100 SPX points lower than Neely.

1050-1150 will be the target zone for buying this dip.


Prechter isnt a trader he is a bookseller.

The only difference between Prechter and Matthew Lesko is Prechter doesnt wear question marks on his suit.


It looks like the c WAVE advance may have started yesterday? The Nasdaq just closed above major resistance. The S&P futures came down to 1170 the other night, perhaps that is enough to get the ball rolling to the upside now.


This "Kondratieff Winter" stuff with a 54 year cycle was invented by someone else who wanted to sell books. Kondratieff never identified Spring, Winter or any other season, and he did not say there was a 54 year cycle. It is hard to find his original work, but the graphs that he used show economic cycles in the 1700 and 1800's that varied in length from about 50 years to about 65 years. This is a pretty wide variance for stock market forecasting !, and Old K didn't invent the idea for the purpose of forecasting. He was trying to understand the workings of capital in an economy. Retrospectively, after some future crash, somebody will claim (and write a book!) that they forecast the K Winter, but it will be BS. K waves are an interesting economic idea, but nobody can forecast anything with a K wave. There are too many intervening variables.


No bear yet

EN wrote: "It looks like the c WAVE advance may have started yesterday? "

Yep. Neely had an alternate count of the b-wave low coming in early, looks like thats what happened.

Last obstacle to this 600-900 point Dow rally is July 18-19 Spiral Calendar lows which will probably be the WAVE 2 of C lows.

Next week should be a down week. Lock and load on Monday July 18... profitable 3 of C upside trading to ALL.

gregory davis

We not only face an economic winter but a depressionary force much greater than the 1930s to a degree which threatens the survival of the human race. This degree comes every 1000 years.the last 7000th is even larger than the prior ones in which god himself will intervene just to save man from total elimination

Alan Slawter

What about the petro-euro? If 8 trillion is no problem, why not borrow 16 trillion more and develop energy independence and everything else we can dream of. Wake up. The world is a complex place and there's no man that knows what will happen tomorrow let alone 10 years from now. Don't be so arrogant. You think you know, but you don't.

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